How many 5 years I still have????
WHY?? WE ARE SO LACK of CONSULTANT MEH????
KUALA LUMPUR: CIMB Equities Research is maintaining its Neutral outlook on the automotive sector after the government unveiled the National Auto Policy (NAP) 2014 following an 18-month delay.
The research house described it as a “disappointment”, pointing out there was no end-of-life vehicle (ELV) policy and extended the timeline to end the open approved permit (AP) system.
“Excise duties will not be cut and the projected 20%-30% reduction in the average car prices over the next five years is already in motion, with Asean localisation and lower import duties.
“The most notable incentive is the tax and duty exemption for all hybrid and CKD electric vehicles, in line with the government’s aim of making Malaysia an energy efficient vehicle (EEV) production hub. This reinforces Tan Chong as our top pick,” it said.
CIMB Research said the main initiative of the NAP 2014 is to make Malaysia the regional hub for EEVs.
To recap, under the NAP, the government will provide soft loans of RM2bil and issue three to four manufacturing licences for EEVs by 2018. To kick-start the EEV programme, the exemption of excise duties and import taxes for CKDs will be extended to Dec 31, 2015 for hybrids and Dec 31, 2017 for electric vehicles.
Beyond these dates, the exemptions would be determined based on the strategic value of what the CKDs bring and their respective investments. The exemption of duties for hybrid CBUs ended on Dec 31, 2013 but CBUs that were imported in 2013 and
sold in 2014 will still be exempted from tax and duties.
Under the NAP, the government expects total industry sales to reach 1m vehicles by 2020, with 250,000 EEVs and RM10bil in EEV-related components for export. NAP 2014 is expected to create 150,000 new jobs. As for APs, the government has decided to conduct an in-depth study to assess the impact of terminating the practice.
“The NAP 2009 had stated that the government would stop open APs by Dec 31, 2015 and franchise APs by Dec 31, 2020. This is no longer applicable,” the research house pointed out.
CIMB Research said Honda Malaysia is likely to be an immediate beneficiary of NAP 2014 as it is ahead of the curve, with its initial investment of RM382mil (and up to RM1bil) for the second line at its Pegoh, Melaka plant. The line started production in
Nov 2013 and will have a capacity of 50,000 units per annum (hybrid and small cars).
“Thus, we think that Honda will obtain the first EEV manufacturing licence and will be allowed to sell its CKD units exempt of all duties and taxes. The new line will enable Honda to meet its sales target of 76,000 units in 2014 (+40% on-year) and 100,000 units by 2016, and allow it to capture Toyota’s top spot in the non-national segment.
CIMB Research said as for UMW Toyota, it has not finalised its EEV strategy. Although DRB will benefit from Honda’s EEV advantage, its 34% stake in Honda Malaysia will not offset Proton’s uncertainties following the NAP 2014.
“Proton’s fragile mid-range market share will be threatened by the EEV CKDs, while its bread-and-butter low-end products will not have the support of an ELV policy.
“Tan Chong is the only clear winner from NAP 2014. It is already prepared to move from selling Serena hybrid CBUs to CKDs in 2014 and is looking forward to the launch of an A-segment vehicle (likely EEV) in 2015. We are only positive on Tan Chong. Investors should be wary of the overly optimistic industry sales forecast of one million units by 2020 from 650,000 in 2013. There will likely be two MRT lines operating in the Klang Valley by then,” it added.